Interest rates 'unlikley' to fall below 0.5 per cent

UK interest rates are unlikely to fall below 0.5 per cent, otherwise the way in which the money markets operate could be affected, it has been claimed.

According to Lloyds TSB economist Trevor Williams, the Bank of England is unlikely to lower rates before looking at other monetary policies.

"I think there is now going to be a cooridnated effort across, not just using interest as a tool of monetary policy, but using an array of other policies that the central Bank now needs at their disposal," he commented.

Currently, the Bank of England base rate stands at one per cent after the monetary policy committee (MPC) voted to cut it by 50 base points last month.

Interest rates are also now at their lowest level since the Bank was established in 1694.

Many economists expect interest rates to be cut again when the MPC next meets.